This week’s Chart of the Week features IBB (NASDAQ Biotechnology Index ETF). The chart for IBB is displaying multiple bullish indicators which has led us to the prediction that IBB is heading to $115. We are looking at the one year chart here and the first thing that stands out is the clear divergence between stock price and the RSI. This is an indication of a gap higher that is soon to come and confirmation that the bottom from the recent move lower has been set. Additionally, support was held twice at $101.28 and the ETF is preparing to test the upper end of a near term channel at $106.68, which we do expect to break. The other momentum indicator that we are looking at this week is the MACD and half way through November we saw a clear cross in the indicator. This is generally a signal of a shift in momentum and it clearly marked the bottom at $101.28 a couple weeks ago. That said, we are looking to break $106.68 this week and gap up to resistance at roughly $110 by year end. Once reaching $110, we may see a small pullback to ~$108 and eventually continue to our $115 target by mid-January.
Farewell and Trade Well,
Founder and Editor-in-Chief